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Paulson, Centerbridge Said to Win Extended Stay Bidding

By David McLaughlin – May 28, 2010Email Share PrintPaulson & Co., Centerbridge Partners LP and Blackstone Group LP won a bankruptcy auction for hotel chain Extended Stay Inc. with a $3.9 billion bid, two people familiar with the matter said.

Extended Stay, which filed for bankruptcy last June, selected the proposal over a rival bid from Starwood Capital Group LLC and TPG Capital after an all-night auction, the people said today.

The two groups were competing for months to invest in Extended Stay and its portfolio of more than 600 hotels. The auction began at 10 a.m. yesterday and ended at about 5 a.m. today after numerous rounds of bidding, the people said. About 200 individuals representing the bidders and Extended Stay’s creditors attended the auction, one of the people said.

The $3.9 billion investment, which requires court approval, will give Centerbridge, Paulson and Blackstone 100 percent of the equity in Extended Stay when it emerges from bankruptcy protection, the person said. An earlier agreement called for the Spartanburg, South Carolina-based company’s senior lenders and investors to each receive equity stakes, according to court documents.

Blackstone Stake

In 2007, Blackstone sold Extended Stay to an investor group led by real-estate investment firm Lightstone Group for $8 billion. Blackstone retained some equity in Extended Stay, according to a Blackstone press release.

Armel Leslie, a spokesman for Paulson, declined to comment. Blackstone spokeswoman Heather Lucania and a Centerbridge representative couldn’t be reached for comment.